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Sunday, May 19, 2024

BSP keeps 3% credit card interest ceiling

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The Monetary Board of the Bangko Sentral ng Pilipinas said Tuesday it retained the existing ceilings on credit card charges so that consumers would continue to have access to affordable financing.

This means the maximum interest rate or finance charge on unpaid outstanding credit card balance of a cardholder remains at 3 percent a month or 36 percent annually.

It said the monthly add-on rates that credit card issuers could charge on installment loans would be maintained at a maximum 1 percent.

Meanwhile, the maximum processing fee on the availment of credit card cash advances stays at P200 per transaction. The ceilings on credit card transactions are subject to review following a six-month period.

BSP Governor Eli Remolona

“The BSP’s decision to maintain the current ceilings on credit card transactions strikes a balance between providing consumers with access to credit card financing at steady rates and ensuring long-term viability of banks/credit card issuers so that they can continue to provide quality service to their clients,” BSP Governor Eli Remolona said in a statement.

Credit card receivables climbed 29 percent year-on-year as of end-May 2023, faster than the 17.1 percent increased a year ago. This was driven by firm demand for credit cards as evidenced by a 34.6-percent year-on-year growth in credit card billings, compared to the 28.5-percent growth in the previous year.

Data showed that amid the expansion in credit card receivables, banks/credit card issuers maintained the quality of their credit card portfolio. Non-performing credit card receivables as of end-May 2023 declined to P23.4 billion from P29.3 billion a year earlier.

The ratio of non-performing credit card receivables to credit card receivables also fell to 3.9 percent as of end-May 2023 from 6.3 percent NPL ratio last year.

The BSP said earlier it would continue to pursue strategies to promote digitalization in the financial industry.  Through the prudent use of innovation, banks/credit card issuers will be able to improve delivery of their services as well as enhance customer experience at lower operating cost, it said.

It said ongoing efforts to instill the importance of the responsible use of credit cards as part of financial literacy programs would help consumers make sound personal financial decisions.

“All these efforts are geared towards ensuring a resilient, dynamic and inclusive financial system,” the BSP said.

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